Paying Down Debt on Credit Cards
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Written by: barrywaters
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Word Count: 563 |
Date: Wed, 18 Feb 2009 |
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The economic tumult of the past year left consumers in this country spinning. Many were at a loss for what to make of their economic futures. With 2009 upon them, consumers are looking ahead and trying to chart a course for their financial security. Some are shaken, but will weather the economic storm okay. Others have racked up debt on their credit cards and are seeking ways to reduce or erase that debt. On average, a person in the U.S. has about four credit cards and about 40 percent of card holders regularly pay their monthly balances in full. Credit cards are a common way of making purchases. If utilized appropriately, they are a handy resource. On the other hand, credit cards offer an enticing path to spend beyond your means. It takes commitment to pay debt off, once it is accrued.
The first step to reducing and eliminating debt on your credit cards is to stop making purchases on the cards. It seems obvious, but it is extremely difficult to pay down debt when you are accumulating more. Do not open accounts for new credit cards when you stop using the current ones either. Simply change your habits. Start using your check book, debit card or paying with cash. Your next step is to analyze your finances and figure out what you can live without in order to free up some funds. The easiest way to do this is to cut your discretionary spending. Stop eating out, going to the salon, paying to have your car washed and purchasing entertainment items you do not need. Take the money you save on those discretionary items and put it toward the balances on your credit cards. You may need to temporarily take on additional income opportunities, if you find that you have no discretionary expenses to reduce.
Once you clearly understand your finances, make reducing the debt on your credit cards your priority. Always pay more than the required monthly minimum on your balances. When you make only the minimum payment, you are paying a significant amount of interest. If you pay more than the minimum, you will pay down more of the balance. If you have debt on many credit cards, focus on paying off the one with the lowest balance first. The emotional benefit of seeing some debt paid off will offer a reward and let you see the light at the end of the tunnel. Send in additional payments on your credit cards, if you ever have free funds. Once you start paying off your credit cards, close the newest ones and keep the oldest. Having long established credit card accounts that are in good standing reflects positively on your credit score and credit report. Maintain your commitment to paying off your debt until the balances on all your credit cards have been paid. Always remind yourself of the dedication it took to pay down accrued debt, especially if and when you decide to use a card regularly again. Stay on top of your balances and use your card wisely. You are responsible for every purchase you make on your credit cards.
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